Summers: U.S. must balance stimulus, deficits

By Ben Rooney, staff reporter


NEW YORK (CNNMoney.com) -- The U.S. government must find a balance between supporting the economic recovery and reducing long-term budget deficits, White House economic advisor Lawrence Summers said Monday.

While the economy has resumed its growth and the possibility of a depression now seems remote, the government should continue its efforts to spur job growth and boost economic output, said Summers, who is director of the White House National Economic Council.

But the challenges posed by the nation's growing budget deficit "cannot be ignored," he added.

"The fiscal policy choices that the United States makes over the next several years will be as consequential as any we have made in a very long time," Summers said in a speech at Johns Hopkins University.

Summers said it was "essential" for the government to run deficits over the last few years as the economy fell into one of the deepest recessions on record.

He said the government's stimulus measures helped revive economic growth, though he acknowledged that many households are still struggling as unemployment hovers near 10%. As a result, he said it is crucial for the government to continue its efforts to support the economy in the near future.

"It would be an act of fiscal shortsightedness to break from the longstanding practice of extending these provisions at a moment when sustained economic recovery is so crucial to our medium-term fiscal prospects," he said.

Still, the government must take steps to ensure that the nation's budget deficit is sustainable over the long term, he added.

The U.S. budget deficit soared to $1.4 trillion last year and is expected to rise past $1.5 trillion this year, according to the Treasury Department.

Summers said much of that deficit will be reduced over the next five years as economic stimulus measures are phased out. He outlined a number of other steps to help bring down the deficit over time, including the Obama Administration's recently enacted health care reform bill.  To top of page

Frontline troops push for solar energy
The U.S. Marines are testing renewable energy technologies like solar to reduce costs and casualties associated with fossil fuels. Play
25 Best Places to find rich singles
Looking for Mr. or Ms. Moneybags? Hunt down the perfect mate in these wealthy cities, which are brimming with unattached professionals. More
Fun festivals: Twins to mustard to pirates!
You'll see double in Twinsburg, Ohio, and Ketchup lovers should beware in Middleton, WI. Here's some of the best and strangest town festivals. Play
Index Last Change % Change
Dow 18,132.70 -81.72 -0.45%
Nasdaq 4,963.53 -24.36 -0.49%
S&P 500 2,104.50 -6.24 -0.30%
Treasuries 2.00 -0.01 -0.69%
Data as of 12:05am ET
Company Price Change % Change
Apple Inc 128.46 -1.96 -1.50%
Microsoft Corp 43.85 -0.20 -0.47%
Facebook Inc 78.97 -1.44 -1.79%
Cisco Systems Inc 29.51 -0.40 -1.34%
Intel Corp 33.25 -0.40 -1.19%
Data as of Feb 27
Sponsors

Sections

Bus drivers for Apple, Yahoo, Amtrak, eBay, Genentech and Zynga have unionized, following in the footsteps of drivers who shuttle Facebook employees. More

Potential presidential candidate says that improvement in unemployment rate is due to millions of jobless not being counted. More

The top 5 consumer complaints have to do with identity theft, debt collectors, imposters, telephone companies and banks. More